As we roll into the Fall season it tends to be make or break time for sellers before the holidays kick in and buyers go on vacation for a few months. We have seen price cuts throughout the South Bay by serious sellers in order to find a buyer before the market goes into a traditionally slow time.
Even the white hot new construction 3-on-a-lot town home market in north Redondo is showing signs of cooling and/or adjustment before the holidays.
Last year (2015) we saw a new construction 3-on-a-lot sell for a low of $795,000 on Grant Avenue. This year, we saw a July 2016 Grant Ave sale push the sales increases even higher, closing at $1,030,000 in only 16 months after the $795k sale.
This same trend occurred away from Grant Ave. Looking back to a 2015 new construction/sale on Rockefeller Lane that sold for a low of $844,000; we watched the market jump only two months later as virtually the same town home sold for almost $900,000. As a result, a developer with over-sized corner lot units on Carnegie and Rindge Lane figured, “why not go for another record?” and came out asking about $1.2 million for their units. And that is where it looks like the market has taken a breath…
Currently only one of those town homes is pending, while one went pending and fell out of escrow, and the third one has been sitting on the market for two months with no deal. The market reception from buyers looks to be mixed at this price.
There is now competition to those record asking prices as 2519 Rockefeller has come to market with three new town homes priced at $1.050 million per unit… a significant discount to Carnegie/Rindge. They are, however, slightly smaller and certainly not as well finished, but it is a compelling price for buyers on a budget. It is too early to tell if these more affordable town homes will be sold quickly as they have only been on market for a week, but that added competition (aka inventory) is a welcomed sign for buyers and the potential for softening prices.
If you happened to notice, all of these sales occurred below Artesia which is known as the “Villas South.” Today it looks like a couple developers took the risk in 2015, during the run up of town home prices in NoRo, to jump across Artesia. Some believe this is a less desirable area known as “Villas North,” but the developers decided to take a shot anyway because land costs were cheaper (and thus more potential profits).
So far it looks a little hairy for their initial asking prices. A developer brought out three units at 2516 Nelson for around $989,000 a unit. After two months of being on market, not one bite. Another single new unit at 2305 Mathews Avenue was listed a month and a half ago for $1,069,000, but that continues to sit as well…and surely there are two additional units for sale, but the developer is trying to outsmart the market by not releasing more inventory in what looks to be a crowded market.
The developer of 2516 Nelson in the North Villas was not to be outdone by their competition over on Mathews bringing only a single unit to market. They too were not showing their entire hand and had listed only half of their development as the neighboring lot was purchased and built on at 2518 Nelson as well. Only now their Plan B has been revealed this week as they have brought out 2518 Nelson as a 6-unit apartment building sale (with the neighboring three units) to see if they can catch a large investor, or an apartment owner in dire need of a 1031 exchange. At a price of $5,790,000 or $965,000 per unit, there does not seem to be too much of a discount for buying in bulk.
Time will tell if the clever tricks of Mathews and Nelson, bringing only one unit to market and posing all six units as an apartment investment respectively, will pay off. Additionally, we will see if the record price-ask listings at Carnegie/Rindge can continue to break records in the Villas South…or perhaps stall.
What we do know is that if you include the new construction 3-on-a-lot units not on market, there are a whopping 15 new construction town homes in The Villas ready for sale. That is significantly more than the nine new construction sales that occurred in all of 2015. Something’s gotta give.
So depending on your real estate interest for new town homes in The Villas, you can have one, six, or even 15 if your heart desires.
It’s Your South Bay. Own It.
Richard Haynes
DRE: 01779425
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The Richard Haynes Real Estate ShowA leader in South Bay real estate for the better part of a decade, Richard thrives as an advisor to his clients with over $248 million in sales as a broker or investment principal at his boutique agency, Haynes. Richard is known for his keen local market insights which have been featured in the L.A. Times, The Street, and Forbes, along with his weekly South Bay real estate blog. [read more]